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Saturday, May 31, 2014

Franco Vielma, a Venezuelan radio talk show host and development
worker with a public company, responds to the accusation that the
Venezuelan government has signed a “pact” with Halliburton and that the
U.S. oil company is now “coming” to operate in the country. He explains
that Halliburton has operated in Venezuela for many decades, and
agreements in recent years have actually reduced the scope of company’s
operations in Venezuela’s oil industry.

As a first clarification: my opinion is that any economic agreement
with Halliburton is questionable and should not pass by a conscious
collective unnoticed; one that recognises in Halliburton a company that
is murderous against the peoples of Iraq and the world.

How Halliburton operates in Venezuela

In order to talk about Halliburton in Venezuela, let’s begin with
other important clarifications: Halliburton isn’t “beginning” operations
in Venezuela. Nicolas Maduro isn’t “bringing” Halliburton to Venezuela.
Halliburton isn’t “coming” to Venezuela as part of a sinister pact
between Maduro and the gringos. It’s not the first time that PDVSA
[Venezuela’s state oil company] signs an agreement with Halliburton.
This company has been in our country for decades. Its headquarters for
decades has been located in Cabimas, Zulia state.

Halliburton has been operating in Venezuela since the times of the
Fourth Republic [1958 - 1998] and its moment of “splendor” was the era
of the “operation agreements” in which the old PDVSA totally privatised
and transnationalised its operating processes. Those that think “How
could Maduro and the government bring this company in and make
agreements with it?” reveal enormous ignorance about what has been
happening in our country since long ago and what this has to do with our
oil. But it’s difficult to blame someone for this, understanding that
we Venezuelans have a century depending on oil and it’s what we know
least about.

Other details to know: Halliburton as an international operator is a
company that has been offering services to PDVSA both directly and
indirectly, as much in the old PDVSA and the new one. Since 2007 the
transnational companies that used to control the Orinoco Belt [a large
inland oil reserve in Venezuela] went from the system of “operating
agreements” to subordinate themselves below the operative and financial
hegemony of PDVSA via the system of “mixed companies”.

This meant that, in nationalising the oil fields, installations and
equipment, the transnational companies had to associate themselves with
PDVSA to continue participating in the business. If not, they could
withdraw themselves, receiving an indemnity calculated in Venezuela and
litigated in Venezuela. That was how Exxon Mobil and Conoco Philips
decided to not accept the new mechanism and a traumatic legal process
began which has served the international attack against PDVSA and
Venezuela.

One of the companies that decided to stay under this mechanism and is
currently in association with PDVSA, in the form of two “mixed
companies” called Petro.Piar in the Orinoco Belt and PetroBoscan”on the
east coast of the Maracaibo lake, is Chevron. Upon Chevron and Texaco
fusing, the consortium that has entered these associations is known as
Chevron – Texaco.

The Bush family is among Chevron – Texaco’s main shareholders. At the
same time they are historic partners of Halliburton, property of Dick
Cheney, who was the right hand of Bush senior and Bush junior in their
war-making adventures in the Middle East, particularly in Iraq. The
relationship between these characters isn’t just based in their war
deals or political alliances. They have solid business between their
companies, as Halliburton has historically been a fundamental operator
of Chevron and Texaco, since before their fusion.

Halliburton was the main contractor of the so called
“re-construction” of Iraq, making deals with enormous profits.
Halliburton is also currently the main operating contractor in the
oilfields of Iraq, of which many are controlled by Chevron Texaco.

The mixed companies, created since 2007, are associations between
PDVSA and a transnational company, under conditions of superiority and
hegemony in the association in favour of PDVSA. The majority of mixed
companies in the Orinoco Belt, for example, have an average of 60 – 65%
of shares in the hands of PDVSA and 40 – 35% in the hands of the
international counterpart. As such, PDVSA guarantees the control of
operations and strategic orientation of the business. Chevron, and by
extension Halliburton, were covered by these mechanisms because they
decided to stay beneath our conditions.

Chevron was a beneficiary of a set of “conditions of trust” that
facilitated PDVSA to consolidate the mixed companies in 2007. In fact,
these conditions continue in the present and are the same as those
offered to Chinese, Russian, Argentine, or Brazilian companies. One of
these conditions is that the international partner in the mixed company,
although it doesn’t have total autonomy in the operative management of
the assigned oilfields, can propose contracts with operators below
preferential conditions, with whom PDVSA, as the head organisation that
controls all operative processes, should countersign and make said
agreements. That is to say, if we are associated with Chevron, we will
be associated with Halliburton by Chevron’s association, as Halliburton
operates in the oilfields assigned to the mixed companies PetroPiar and
PetroBoscan.

To illustrate it another way: if it’s necessary to increase the
production of barrels of oil in the Belt, it is necessary to make
agreements with PetroPiar. If financing is necessary, Chevron will make
its contribution, and if it’s necessary to undertake operations,
Halliburton will participate as a contractor. PDVSA has to make these
agreements with Halliburton, as it [PDVSA] is the company that has the
hegemony of the Belt and has shares in PetroPiar, and it’s the one that
assumes the responsibility of carrying out these agreements.

If we check the Plan of the Nation [the national development plan
drafted by Hugo Chavez in 2012], the aim for the increase in extraction
of barrels per day (bpd) is from 3 million bpd in 2012 to 6 million bpd
in 2019. This implies accelerating all the processes of joint action
with PDVSA and all its partners, especially in the Belt. It is due to
this that PDVSA makes these agreements with these companies.

Currently all of the mixed companies have the obligation of
re-launching operative schedules, estimating necessary financing and
accelerating production. $US 140 billion is needed to put all of the
Belt into operation, 7 thousand kilometers of pipes, two refineries, two
deep water ports for supertankers, and thousands of drills and tillers
for this end.

To make this investment sustainable, a sensible and immediate
increase in current production is required, as in 2014, this goal is
already lagging compared with what is set out in the “Sowing the Oil”
plan, which is what governs production goals. Put another way, if PDVSA
needs to meet the goal, if it’s necessary to pump more oil because the
country needs more foreign currency, then it’s necessary to work with
the operators that are already working and that already have operations
in the oilfields of the Belt. That’s the explanation for the
controversial PDVSA – Halliburton agreement.

That said, it’s necessary to make something known. This way of doing
business in the framework of the new petroleum policy was thought of as a
formula to restore the leading role of PDVSA and the state in the
systems of production in oil deposits, without this undermining foreign
investment and creating the conditions for the transnationals themselves
to destroy our vulnerable system of oil production: as it also must be
said, after 2002, in 2007, and in the present, vestiges of technological
and operative dependence on these operators has been and is still
palpable.

Our oil company has been the victim of a partial technological
blockade and the scant transfer of technology by these companies. To
dispense with these companies immediately means that our very vulnerable
capacity to produce would also be affected, especially in the Belt, the
extra-heavy oil found there and on which our national development and
finances depend. The logical thing in this case, seeing it from a
sovereign point of view, would be to break the link of technological
dependence. There has been great advancement on this matter, but not at
the speed hoped for.

As a personal reflection I should say that these agreements were
thought up and signed in a time in which the world saw the destruction
of Iraq. It’s painful to say it, but these agreements are part of the
Chavez era, not the Maduro era. Lamentably it was Chavez, not Maduro,
who signed this formula. It’s bad taste to talk of Chavez in this way,
but it was Chavez who signed these agreements, with Chavez himself
recognising that there existed objective conditions that implicated such
a lamentable decision.

The context of the moment must be understood: Chavez made these
agreements with the one and simple reason that they had to be made. No
one in this country who knows the oil industry can say that it’s a good
idea to cut off the international investment and technological support
of the transnationals. Whoever says so doesn’t have the remotest idea of
what they’re talking about, and it’s for a reason, not for imbecile
caprice of Chavez or Maduro, that today PDVSA is associated with China,
Brazil, Russia, Belarus, Argentina, India, Iran, Japan, among others, in
our Belt, receiving their investments and technology.

If we review in history what could be considered incongruities, we
find a bit of everything. Apart from the exceptions of the case, in
Cuba, to overcome the blockade, Fidel Castro had to negotiate with
Peugeot of France, a criminal company vs. labour rights in the world, so
that Cuba could have modern cars. It also had to do the same with Fiat,
a criminal company and financier of the Italian massacre in Libya in
2011. Cuba has even made agreements with enslaving companies like
Adidas, which has sponsored the Cuban Olympic delegation. These
agreements have emerged from pragmatism and what could be considered
incongruities, but it would need to be checked up to what point this is
bowing down or not. I leave that to the consideration of each person.

My opinion with respect to Halliburton is that we should definitely
work with urgency to overcome the ties of dependency that have been
maintained with this company and Chevron – Texaco. This should be done
for reasons of strategic security and ethics. What I believe should be
done is to assume Chevron and Halliburton as dispensable, due to ethics
and the common sense of being Venezuelans living in a besieged country
with the largest oil reserves in the world at our feet.

It also must be said that today Halliburton in Venezuela is not what
it once was. In fact, it’s one of the operators with the least reach and
its role as an actor doesn’t compare with that of other operators that
work with other consortiums. If we check the operations of PetroSinovesa
(China – PDVSA), PetroCedeño (France – PDVSA), and PetroBieloVenezolana
(Belarus – PDVSA), we will find that their operations are of greater
volume and the role of their operators is much greater in importance in
the Belt. This [reality] is far from certain commentaries that buzz
around that “Maduro handed the Belt over to Halliburton”.

These are complex times. I can’t but underline the over-excited and
one sided nature of the comments of many “comrades” (who knows up to
what point) that strive, almost with pleasure, to attack Maduro, at the
expense of the ignorance that there exists over these issues and at the
expense of the immature attitudes in sectors of the left-wing in our
country. Certain unconcealed expressions are being made known from
within our classic, divisive, and fragmented left, and a great game they
give to the right-wing by manipulating information and using the sacred
act of criticism and opinion to demobilize and divide Chavismo from the
inside. There are things to be said, things to criticise, issues in
which is it necessary to express opinion, but there are very few cases
in which this issue (of Halliburton) has been discussed with the correct
information.

Let’s not fall for the games of manipulation, wherever they come from
comrades. Chavez taught us to by studious and inform ourselves. He
taught us that necessary and conscious criticisms must be made. Let’s
not allow this sacred act, of expressing opinion, which we must
exercise, to become an instrument of our own destruction. I call for
revolutionary cohesion and a conscious reading of what’s going on in our
country.

This article is an abbreviated version of the original. Translated by Ewan Robertson for Venezuelanalysis.com

Thursday, May 22, 2014

FARC's morphing rebels and the Colombian rap

By Christian Molinari

Colombian guerrilla group FARC's latestrelease of a rap videogoes
to show how the group is changing tactics: they seem to be morphing
from rebel rousers hell-bent on spreading havoc, to hip hoppers
embracing social media to spread a message of national unity.

The video – released in celebration of the organization's 50th anniversary on May 27 and which comes in the context of peace talks with the government and just days before national elections – is called "Pueblo colombiano: Pa' la mesa", making a call for the Colombian people to come together to the negotiating table.

In
the song, FARC also professes to have "no fear that they beat me" and
calls for "the truth to be addressed," while labeling President Juan
Manuel Santos' government a "circus." It follows a tune – in a very
loose definition of the word – released in September 2012, called "We're going to Havana" which marked the beginning of peace negotiations, held in Cuba, with Colombia's government.

Comparing
the latest video with that released in 2012, it is noteworthy how the
rebel group has advanced when it comes to production skills - and
melody, for that matter. What one must not forget, though, is that the
FARC is still a guerrilla group responsible for the killing and/or
kidnapping of hundreds, if not thousands of people, which employs drug
and arms trafficking, distortion and illegal mining to fund its
activities. Seeing the videos of young, idealistic commandos happily
singing, chanting and prancing around, this is easy to forget.

"We've sworn to overcome, and we will overcome!" the group pronounces on the opening page of its website.

"The
government and mainstream media like to trot out a storyline that the
FARC is on its last legs. But I think underestimating their capacity has
the potential to drag out the war while leaders look for a military
solution instead of a negotiated peace," said BNamericas' Colombia reporter Arron Daugherty when consulted on the matter.

Santos
comes up for reelection this weekend, and he has placed high political
stakes on negotiating a peace accord with the FARC. Caught between a
rock and a hard place, though, President Santos cannot be seen as being
soft on the guerrillas.

Negotiations in Havana have recently
brought the evasive peace accord one step further: with the latest
agreement on how to curb the drug trade, participants have agreed on
three of five points on the agenda. Agricultural reform and the rebels'
participation in the political process were agreed upon last year, and
the remaining two issues are transitional justice and reparations to war
victims.

Reports are at odds over how many members the FARC now
has. Regardless, they are now coming out of the remote jungle, entering
cities to recruit sympathizers and employing new means such as social
media to get their message across. They remain a force to reckon with,
and failing to keep them engaged in negotiations would be a significant
step back in the peace process.

Seeking truth

Is the owner of the company harvesting aragonite at Ocean Cay in The Bahamas also an investor in a company in the United States buying aragonite from Ocean Cay?

If the answer to this question is yes, it would mean the same people selling aragonite from our waters are selling the mineral to themselves in the United States, and this would have huge implications.

If the answer is yes, we wonder what impact this relationship is having on how aragonite is priced out of The Bahamas.

This question has emerged out of a National Review investigation into the aragonite industry and whether The Bahamas government is getting fair royalties.

This angle is one we could not ignore as we present fair reporting on what is now a national controversy.

The question was raised as a result of the discovery of a presentation available on the website plasticsindustry.org.

The presentation was made by the principals of U.S. Aragonite Enterprises, an American company, and Sandy Cay Development Company, a Bahamian firm, according to the website.

Sandy Cay has a lease with the Bahamas government to operate an aragonite facility at Ocean Cay, a 95-acre site, located nine miles south of Cat Cay, 27 miles south of Bimini and 65 miles east of Miami.

The online document states that U.S. Aragonite is the exclusive supplier of oolitic aragonite to the plastics industry.

It adds that the company was founded in 2011 and that “investors include owners of Ocean Cay, the natural source of the mineral”.

We knew from our previous interview with Sandy Cay Development Company President Tony Myers that U.S. Aragonite is one of his customers. But could it also be a company he is an investor in?

We contacted Myers with our latest questions.

When we read that line from the presentation to him, Myers said he is not an investor in U.S. Aragonite, but added that he had been in talks with U.S. Aragonite over buying a 25-percent stake in the company.

He also confirmed that he has sold to U.S. Aragonite, but said it was only one shipment, which he said he sold at $50 per metric ton.

Over the weekend, Myers showed us the invoice for this sale. According to that invoice, Sandy Cay sold US Aragonite 11,023 tons of aragonite from Ocean Cay on July 10, 2012.

Myers previously told us that his company has only sold 16 shipments of aragonite since it bought the lease in 2009 and formally began operations in 2010.

He said his shipments sold for between $12 and $20 per metric ton.

Myers showed us invoices for those shipments. The sale to U.S. Aragonite was the highest priced.

Under the 25-year lease Sandy Cay signed with the government on April 20, 2012, the government gets $2 per metric ton.

Myers previously told National Review that Sandy Cay has shipped 106,855.69 metric tons of aragonite since 2010 to various companies.

The government of The Bahamas has received $213,000 in royalties, according to a document he showed us.

Myers told us he has not yet made a profit from the Ocean Cay operation, five years after purchasing the old lease, and four years after starting aragonite exports.

When told that the U.S. company he sold to is naming his company as an investor, Myers said, “I didn’t know they did that. Technically, they should not have done it.”

He said that claim is not accurate.

But the claim is contained in the presentation on the plastics industry website that carries the names of both Myers and Marc Goldenberg, president of U.S. Aragonite.

We then contacted Goldenberg to ask if Sandy Cay is an investor.

He promised to get back to us with the answer to that question as he said he needed to check something.

Goldenberg soon contacted us back and advised that Sandy Cay is not an investor.

When questioned, he confirmed that there had been discussions with Myers to become an owner in the U.S. company, which lists its address as Salem, Massachusetts.

“We have talked about it,” Goldenberg said.

“But Sandy Cay, or Ocean Cay, isn’t an investor. At the very beginning, we were talking about that down the road, but things have not worked out.”

The online presentation that lists Sandy Cay as an investor in U.S. Aragonite is titled “Goldenberg Myers Oshenite SPI presentation”.

An agenda from the plastics conference last May in Nashville, Tennessee, lists Myers and Goldenberg as speakers on a panel titled “Bioplastics in Flexible Film”.

We found it curious that this presentation, which states Sandy Cay is an investor in U.S. Aragonite, had both the names of the Sandy Cay and U.S. Aragonite principals attached.

Goldenberg said he was not familiar with this and did not know why their names were listed together.

He confirmed that Sandy Cay is a supplier of aragonite from Ocean Cay to his company.

While Myers told us his company has only ever sold one shipment to the U.S. company, Goldenberg said Sandy Cay is “our only supplier”.

Myers said that shipment at $50 per metric ton is “the highest we’ve sold yet and every other invoice has been to non-related third parties”.

Pressed further on the matter of a reported investment relationship with the U.S. company he has sold aragonite to, Myers said, “Technically, we’re not an investor in it. Sandy Cay holds no stock in that company”.

He said the original presentation document put into the public domain by plasticsindustry.org was prepared by Sandy Cay.

According to Myers, U.S Aragonite “inserted” the additional pages, including the one that claims Sandy Cay is an investor in U.S. Aragonite.

Myers provided National Review with the presentation, minus those additional pages, when we first met with him more than a week ago.

On Friday, he acknowledged that Sandy Cay has a close association with U.S. Aragonite.

Myers noted that an investment in U.S. Aragonite would have required special approvals from The Bahamas government.

But he said the investment arrangement was never solidified as neither U.S. Aragonite nor Sandy Cay was doing well in the business.

Myers added, “It is the only customer that has not paid us. They lost so much money in trying to resell it into the plastics market. We’re not profiting by it and we’re not doing anything wrong because we don’t formally own anything in the company (US Aragonite).”

He also told National Review that Sandy Cay was only seeking that minority 25 percent interest.

“Why would I give them any preferential treatment when I would have only owned 25 percent?” Myers asked.

Referring to the statement that his company is an investor in U.S. Aragonite, Myers said, “They made that statement to try and strengthen their ties to our company, so that they can be seen as stronger.”

Goldenberg also told us U.S. Aragonite is not performing robustly.

He said it sells aragonite it gets from Ocean Cay after it works with another company to process the product.

“We sell it to the customers who would use it in certain applications,” Goldenberg said.

Myers has told us that aragonite is not refined at Ocean Cay.

Goldenberg explained that, “Raw material is useless in most applications. You can’t take the raw material and put it into plastic. You have to refine it.”

According to the presentation on plasticsindustry.org, U.S. Aragonite holds 50 percent ownership in Oshenite Performance Processing, a dedicated aragonite grinding facility.

U.S. Aragonite’s website notes that Oshenite oolitic aragonite is created naturally in the shallow waters of The Bahamas.

The website says, “Its genesis stems from an organic cycle of precipitation scientifically known as whitings, which yields a continuously renewing supply of an ultra 97-99 percent pure mineral; 20 million tons per year! It is pure from the ocean!”

Principal

Myers is also listed as the principal of another company, Ocean Cay Aragonite LLC, based in Boca Raton, Florida.

According to an online search, it was founded in 2011 and is privately held.

When we asked Myers about this company, he said, “I am a principal in it, but I’m not a shareholder.”

He said the company was set up, but never really used.

“We should have liquidated it and gotten rid of it,” he told National Review.

“We never sold anything to them. We never transferred any goods to that company, ever.”

A telephone number attached to the company online led us to a Jayson Meyers, who is listed under the rubric “officers and directors”.

Meyers said he and Tony Myers are not related, and noted that their names are spelt differently.

Meyers, whose address is listed as North Palm Beach Florida, said he is a “management consultant” for Sandy Cay.

He said he makes sure that the materials needed to operate at Ocean Cay are coordinated.

Asked whether Ocean Cay Aragonite sells aragonite, Meyers said, “It was set up to sell aragonite in the U.S. At one point it was conceived to do so.”

But he said it does not sell aragonite.

Concern

These matters have added another element to the aragonite debate that continues to rage.

Tony Myers has strongly rejected suggestions that his company is discounting its prices at Ocean Cay and benefitting from selling at a higher rate once the product gets in the United States.

We make no claim that he is indeed doing so, but report only on the trail our investigation followed.

As we opined in this space last week, it is important to get the facts out — without the hysteria.

The questions surrounding ties between Sandy Cay Development Company and U.S. companies are legitimate.

Getting the answers is important for full disclosure.

We admit there is something unsettling about the documents that are easily available through online searches.

The explanations given by Myers and Goldenberg do not fully line up.

It is also odd that the files Myers showed us reflect just one invoice for a shipment to U.S. Aragonite, when Goldenberg, the president of U.S. Aragonite, claimed Sandy Cay is his only supplier of aragonite.

While there has been a whole lot of misinformation spewed on this issue in recent weeks, the controversy has led us in an interesting direction.

There are more questions, and understandably, many Bahamians are demanding answers.

Minister of the Environment Kenred Dorsett assured on Friday that all matters connected to aragonite in The Bahamas, including Sandy Cay’s pricing structure, are being thoroughly reviewed.

Friday, May 16, 2014

Geneva, May 13, Cuba condemned the economic,
financial and commercial blockade imposed on the
country by the United States for more than 50 years,
citing it as the principal obstacle to the
fulfilment of the country’s Right to Development.
The aggression persists and intensifies,
constituting a massive, flagrant and systematic
human rights violation, stated Cuban representative
Alejandro Castillo.

During the 15th session of the Working Group on the
Right to Development, Castillo commented that to
justify the blockade, the U.S. government employs
various political strategies, including the absurd
and unjustifiable designation of Cuba as a state
sponsor of terrorism.

Castillo also emphasized Cuba’s strong rejection of
the manipulation of an issue as sensitive as
international terrorism, in an attempt to convert it
into a political tool used against Cuba and to
justify the blockade.

Castillo demanded that Cuba be definitively removed
from the spurious, unilateral and arbitrary list
which constitutes an affront to the Cuban people and
demanded that the U.S. lift the blockade, as the
international community has called for. Since the
imposition of the blockade in 1962, until April
2013, the economic damage inflicted on Cuba has
exceeded one trillion dollars.
During his speech Castillo stated that almost 30
years after the creation of the Declaration on the
Right to Development, the issues continues to be a
priority for many countries, including Cuba.
The global economic crisis that is currently
affecting all nations, the negative impact of
neo-liberal globalization, the protective barriers
implemented by rich countries and unequal exchange,
are some of the obstacles that, at an international
level, threaten the realization of this right,
commented Castillo. He also stated that if
there were political motivation from industrialized
nations they could, quite easily, effect a big
change for billions of people.

The activities of the Working Group on the Right to
Development, a subsidiary body of the United Nations
Human Rights Council, will continue until May 16,
with the participation of representatives from all
over the world. (PL)

CONSERVATION PAYS – Save The Bays CEO Lindsey McCoy witnessed firsthand
the profits to be gained from preserving natural beauty during a trip to
Costa Rica.

A leading environmentalist in The Bahamas said Costa Rica has shown
every country in the Caribbean that preserving natural beauty pays,
appealing to those who treasure flora, fauna and natural wonders above
t-shirts and trinkets.

Lindsey McCoy, who was appointed CEO of the fast-growing
environmental movement Save The Bays earlier this year, commented on the
winning model Costa Rica has created after returning from her most
recent re-discovery tour of the country that extends from the Atlantic
on one coast to the Pacific on the other with a central mountain range
overlooking its coastlines.

“And with only a tiny fraction of the world’s land mass, Costa Rica
holds 6% of the world’s biodiversity,” said McCoy. “The jungles, the
forests, the monkeys, the crocodiles – everything still has the feeling
of being a little wild. Perhaps because they have done such a remarkable
job of preserving what they have, especially the forests, they have
created an oasis that appeals to anyone who wants to experience a place
where the beauty of the natural world is all around you. We can do that
here, too. We have so much to work with.”

McCoy on ziplineAbout to take the plunge. Zip-lining is among the biggest attractions in mountainous Costa Rica

Costa Rica was not always the poster country of good environmental
management. In the 1960’s and 70’s, it was paying the price for
deforestation from massive tree cutting to make room for cattle grazing.
Coastlines were eroding. The once majestic land along with the variety
of flora and fauna was declining faster in 20 years than it had in
hundreds, sacrificing its majesty for the sake of farming and, in
particular, a few wealthy farming families.

The political will to reverse the process, said McCoy, spawned more
than a decade of revival. Costa Rica signed on to 45 international
treaties, created and funded a new environment and energy department,
enacted reams of legislation with strong legs and regulations, won the
buy-in from hoteliers and others in hospitality.

That about-face netted dramatic results.

Today, McCoy noted, 25% of the land is in national parks. Ninety-two
percent of the electricity is generated by renewable sources.

“Even more exciting is that once their policy changed and they
realized the value of protected land they were able to restore much of
the forests they had lost to logging and agriculture,” said McCoy. “I
have always respected Costa Rica for its focus on eco-tourism and
promoting its natural resources, but when I started reading more about
the country I realized its commitment to the environment goes even
deeper…clean energy, paying for environmental services and policy to go
carbon neutral.”

It was Costa Rica, she recalled, that created the Certification for
Sustainable Tourism, now a badge of honour sought after by those in the
hospitality industry in many countries.

McCoy family before tubingMcCoy and her son Frye get ready to brave the rapids. A number of rivers in Costa Rica offer kayak and tubing attractions.

“The message is that Costa Rica took action to restore and protect what
it knew made it a desirable tourist destination and a great place to
live,” said McCoy. “The promise of a quick dollar from a developer paled
by comparison to the promise of a life of beauty for the country. They
understood that you did not have to give up jobs and economic growth to
achieve tourism success. Just the opposite. Create the right environment
and they will come.”

Monday, May 12, 2014

The Aragonite Hysteria

President of Sandy Cay Development Co. Limited Tony Myers told National Review that claims the company is making substantial sums of money from its aragonite operation at Ocean Cay are not true.

The Bahamas National Citizens Coalition, National Congress of Trade Unions of The Bahamas President John Pinder and others have claimed that aragonite is selling for $900 per metric ton on the open market, but the government is only getting $2 per metric ton.

After he was contacted by National Review, Myers, a Bahamian businessman, said the unprocessed aragonite being shipped from Ocean Cay is being sold on average for $12 to $20 per metric ton.

We requested that he show us invoices to prove his statement.

Myers was off island when we made the invoice request this weekend. He electronically provided one invoice that shows a recent sale for $12.50 per metric ton and committed to providing us with additional invoices to show the company’s prices.

He also told us the company has only had 16 export shipments since it started aragonite harvesting in 2010. He also provided National Review with documentation on those 16 shipments.

According to the documents provided to us, Sandy Cay has shipped 106,855.69 metric tons of aragonite since 2010 to various companies.

The government of The Bahamas has received $213,000 in royalties.

We admit our surprise that the shipment amount seemed so low.

Myers estimated that the resale cost of aragonite — after his company sells to U.S. companies and they complete the refining process — increases to around $75 per metric ton for the glass market and up to $400 per metric ton for the plastics market.

But he explained, “It takes a huge amount of labor, specialty equipment and electricity cost to take this mineral down to a size of three microns — a very, very small particle size, basically the size of smoke.

“It is combined or coated with a chemical called stearic acid, and then it’s moved into a compounding facility where it’s combined with plastic resin, so there’s a lot of costs that are added to it.

“So when you say oh, you’re selling it for $900 a ton, or even if you were to realistically say you’re selling it for $400 a ton, well, there’s a tremendous amount of cost or value added that has been built into the material cost from when it’s left the ocean at Ocean Cay to the time it actually meets that market.”

The aragonite does not attract the estimated $400 per metric ton sale price at Ocean Cay because it is not refined there, he said.

We were also stunned to hear Myers say the company has not yet made a profit from the operation and pressed him repeatedly on why it has stayed in business.

Myers said Sandy Cay is now poised to make money from the operation, although competition for calcium carbonate is great.

We start with those statements in the context of all that is being said nationally now about aragonite and what we as Bahamians could earn from it.

Debate

Across The Bahamas, there is growing hysteria over aragonite, a naturally occurring unique carbonate mineral found in abundance in our ocean.

Commonly, it is known as sand and has widespread uses in various industries, including aggregate, agriculture, glass, power plant desulfurization, plastics, food, pharmaceuticals and cosmetics.

We are told by a citizens coalition of union leaders, pastors and civic activists that Bahamians are being raped by developers mining our precious natural resources — and that successive governments have signed sweetheart deals with investors ruthlessly scarring our environment to our detriment.

Those driving the discussion — the Bahamas National Citizens Coalition and John Pinder — tell us that, “From 1964 this outrageous exploitation of our resources has continually taken place with minimal benefits to The Bahamian people and exorbitant benefits to private citizens.”

We are also told that if the government of The Bahamas negotiated the royalties we deserve, the government could pocket as much as $300 million per month. This renegotiation could wipe out our national debt, make us all prosperous and drive down our social woes, they tell us.

We have also heard that in 18 months, every Bahamian could have at least $50,000 in their bank accounts, if only the government would act in the interest of its citizens and do the right thing.

The voices of the union leaders and the other activists have been getting louder, as have the voices of many people calling into local talk shows and demanding the government take action to stop this “criminal act” against its people.

In all of this, we have barely heard the voices of our leaders in government and we have not heard the voices of those harvesting aragonite.

The debate has largely been driven by emotions.

So we set about getting the facts. In so doing, we approached the matter without any prejudice.

What struck us in our initial probe is that the Bahamas National Citizens Coalition, John Pinder, and others driving the hysteria are largely misinformed.

Admittedly, this is a complex matter and we ourselves still have a great deal of research to do. But from our initial digging, we have started to sort through the confusion and seek to provide a more reasoned, fact-based approach to the aragonite discussion.

The first thing we did was contact Sandy Cay Development Company Ltd., the company producing aragonite sand in the crystalline form “oolitic aragonite” at Ocean Cay, south of Bimini.

Our phone call was answered and Sandy Cay President Tony Myers agreed to a meeting with National Review to share with us what is taking place at Ocean Cay and provide us access to important figures on pricing and production.

We also read Sandy Cay’s lease with the government of The Bahamas and discovered that some of the claims being made by the coalition are not true.

Despite the coalition’s statement of “fact” that the royalties negotiated by the government is renewable every two years, we have seen nothing in the 25-year lease to suggest this.

So, despite all that we have been hearing, there is nothing coming up for renewal in June, or anytime soon.

Coalition Chairman Rev. Andrew Stewart admitted to National Review when we contacted him on Friday that the coalition has not seen the lease, has not contacted the investor, and based that statement of “fact” on what he called “an assumption”.

This stunning admission casts doubt on everything we have heard so far from the coalition driving this debate.

This is not to say that the government should not step into this debate, provide clarification and lay out the facts for Bahamians dispassionately.

History

Ocean Cay, the 95-acre site of the country’s only aragonite operation, is located nine miles south of Cat Cay, 27 miles south of Bimini and 65 miles east of Miami.

The cay was originally around 30 acres and built in the 1970s.

A popular Sports Illustrated article from 1970 that is currently making the rounds on social media said the Dillingham Corporation had “exclusive rights in four Bahamian areas totaling 8,235 square miles”.

“In these areas there are about four billion cubic yards — roughly 7.5 billion long tons — of aragonite.

“At rock-bottom price the whole deposit is worth more than $15 billion. An experienced dredging company like Dillingham should be able to suck up 10 million tons a year, which will net the Bahamian government an annual royalty of about $600,000.”

It said, “On the basis of such big, round figures, the mining of aragonite seems to be a bonanza operation. In reality, it is still a doubtful venture for both Dillingham and The Bahamas.”

In 1984, Marcona Ocean Industries bought the operation and held it until 2000.

On March 27, 1992, then Minister of Works and Lands Philip Bethel signed a 21-year lease with Marcona. The royalty was between 14 cents and 30 cents per metric ton.

Marcona sold to three markets: glass, agriculture and power.

In 2000, the AES Corporation bought the lease, hoping to convince The Bahamas government to agree to the establishment of a liquefied natural gas facility there. Amid a great deal of controversy over LNG in The Bahamas, no approvals were granted and the company eventually packed up and left.

It sold to the current owner, Sandy Cay Development Co. Limited in 2009. According to Myers, it is 100 percent Bahamian owned. The previous companies were all foreign owned.

A letter dated June 3, 2010 written by Permanent Secretary in the Office of the Prime Minister David Davis to Sandy Cay’s lawyer, H. Campbell Cleare III advised that approval was granted for the company “to recommence its mining operations at Ocean Cay and to export aragonite from The Bahamas”.

Davis advised, “For a period of two years commencing from the date of this letter the royalty payable to the government shall be $2 per metric ton, payable at the time of export from The Bahamas.”

He also wrote that the island lease payment was $7,500 per annum.

Additionally, the letter advised that the company would be afforded duty exemption on the import of equipment required for its start-up operations as per the current lease. “However, this exemption will not be extended to consumables...”

The letter also mandated that the company provide the government with quarterly statements as to the amount of aragonite mined and exported and the destination of such exports.

Davis wrote, “This office stands ready to commence negotiations for the new lease, and in this regard, you are invited to prepare a first draft”.

It seems the June 3, 2010 letter from Davis — in the absence of a public release of the lease eventually negotiated — has fueled this misinformation of a two-year renewal.

The government signed a lease with Sandy Cay on April 20, 2012. It provides for “an initial term of 25 years”. It provides for “the right of renewal hereinafter”.

The lease was backdated to June 3, 2010, the date when negotiations started for the new lease.

Myers explained to National Review that after he purchased the former lease from AES in 2009, the Ingraham administration had concerns about the purchase by a Bahamian company from a foreign firm.

He said the operation was placed on hold. It resumed the following year after Davis issued the letter advising Sandy Cay that it may recommence operations while the lease negotiations take place.

Royalty

The new lease signed with Sandy Cay provides for “a royalty computed as B$2 per ton for demised mineral exported from The Bahamas encompassing the first five years of the lease, after which the royalty shall be computed as 10 percent of the sales price, with a minimum fee of B$2 per ton up to a maximum fee of B$12 per ton for demised mineral exported from The Bahamas”.

It also states that the rent for the lease is $7,500 per annum commencing June 3, 2010.

For years three to seven the lease payment is fixed at $8,250. It continues to rise up to years 23-25 where it is set at $11,250.

The lease provides for the government to have full access to Sandy Cay’s books.

Understandably, the royalty issue has taken precedent in the raging aragonite debate.

In a document it prepared for the Ingraham government titled “Oolitic Aragonite Royalty Fee Analysis”, Sandy Cay says, “The royalty fee rate should be less than the proposed B$2 per ton or for that matter far less than the new reference to in the media”.

Further to this, Myers said, “There is no way that a rate of B$350 per ton or any other rate referred to in the media can be supported in the feasibility of this operation now or ever in the future.”

The report states: “In fact, the proposed royalty rate of $2 already makes Ocean Cay uncompetitive with both U.S. manufacturers of sand and Freeport manufacturers of sand.

“Florida Sand Manufacturers: The royalty rate in Florida, where our main competitors operate from, is called a “tax on severance” as defined in the 2011 Florida Statutes under Section 211.31 and is currently eight percent of the sales value or about U.S.$ 0.72 per ton.

“Freeport Sand Manufacturers: The other main competitor for Ocean Cay is Martin Marietta in Freeport, Grand Bahama, who enjoys a full tax free and royalty free business environment under the Hawksbill Creek Agreement. “This combined with the fact that Martin Marietta is one of the strongest aggregate producers in the U.S. makes Ocean Cay’s position even more disadvantageous.”

In that document to the former administration obtained by National Review, Sandy Cay proposed a royalty fee rate either in line with the original lease or no more than eight percent of the sales price (typical sales price is between $8 to $30 per ton; so, a royalty fee of between $0.64 and $2.40 per ton).

The report said, “The harvesting of aragonite through mining, followed by manufacturing, classifying, shipping and distribution, is a costly process which requires significant capital investment and a strong sales and marketing costs.

“Unlike any other mined mineral, aragonite is organic and classified by the USDA as a renewable resource, meaning that Ocean Cay is not depleting a natural resource of The Bahamas.

“According to scientific data combined with carbon analysis it is proven that aragonite is forming on a daily basis on the banks of The Bahamas. Ocean Cay is merely practicing underwater agriculture by harvesting the aragonite which is growing daily.

“We hope that you sincerely appreciate the costly investment we have made in this facility to produce one of the only green renewable minerals in the world. We sincerely need your support in making this project a success, consequently your understanding of our commitment and the costs associated with this is critical in making this a success for both Ocean Cay and The Bahamas.”

Profit

Again, Myers said Sandy Cay has not and is not now making a profit.

So how has it been able to stay in business and why is it still in business?

Myers told us, “Through years of scientific and market research funded by us and the acceptance of independent public institutional research, we have now finally obtained global recognition and acceptance of ooilitic aragonite as a sustainable mineral.

“Major global companies like Procter and Gamble, McDonald’s and Walmart are concerned over the environmental impact of the packaging of their products.

“The ecological concern has been a catalyst for their interest in oolitic aragonite.

“And all of these companies really recognize sustainability and the need for protecting our environment.

“The also recognize the fact that this mineral is unique in the fact that it is a major contributor to carbon sequestration from our environment.

“They love how the product fits into their global concerns, but it must be fairly priced and competitive within their respective markets.”

Myers added, “They think oolitic aragonite is a great replacement to normal calcium carbonate because normal calcium carbonate also uses this market, but this is much better.

“It’s not damaging the environment. It’s being regenerated every year and they have to show to their consumers...that they’re interested in cleaning up the environment. They’re interested in using ecologically sound materials.”

Myers believes Sandy Cay in the future will turn a profit.

“We hope that this will generate into a business whereby we’re able to sell more into the plastics market and we are slowly making some very good inroads,” he told National Review.

“We’ve made some small steps toward a successful business, and The Bahamas will be recognized for this contribution in a fair and equitable market driven manner.

”The Bahamian people and our company shall in due course reap the rewards of the hard efforts of our governments in developing this resource.”

Saturday, May 10, 2014

Dredging Money From The Bank

Across the inky-blue Gulf Stream from Florida, near the sheer
edge of the Great Bahama Bank, a new island is emerging from the sea.
Although it bears the appealing name Ocean Cay, this new island is not,
and never will be, a palm-fringed paradise of the sort the Bahamian
government promotes in travel ads. No brace of love doves would ever
choose Ocean Cay for a honeymoon; no beauty in a brief bikini would
waste her sweetness on such desert air.

Of all the 3,000 islands and islets and cays in the Bahamas,
Ocean Cay is the least lovely. It is a flat, roughly rectangular island
which, when completed, will be 200 acres and will resemble a barren
swatch of the Sahara. Ocean Cay does not need allure. It is being
dredged up from the seabed by the Dillingham Corporation of Hawaii for
an explicit purpose that will surely repel more tourists than it will
attract. In simplest terms, Ocean Cay is a big sandpile on which the
Dillingham Corporation will pile more sand that it will subsequently
sell on the U.S. mainland.

The sand that Dillingham is dredging is a specific form of
calcium carbonate called aragonite, which is used primarily in the
manufacture of cement and as a soil neutralizer. For the past 5,000
years or so, with the flood of the tide, waters from the deep have moved
over the Bahamian shallows, usually warming them in the process so that
some of the calcium carbonate in solution precipitated out. As a
consequence, today along edges of the Great Bahama Bank there are broad
drifts, long bars and curving barchans of pure aragonite.

Limestone, the prime source of calcium carbonate, must be
quarried, crushed and recrushed, and in some instances refined before it
can be utilized. By contrast, the aragonite of the Bahamian shallows is
loose and shifty stuff, easily sucked up by a hydraulic dredge from a
depth of one or two fathoms. The largest granules in the Bahamian drifts
are little more than a millimeter in diameter. Because of its fineness
and purity, the Bahamian aragonite can be used, agriculturally or
industrially, without much fuss and bother.

It is a unique endowment. There are similar aragonite drifts
scattered here and there in the warm shallows of the world, but nowhere
as abundantly as in the Bahamas. In exchange for royalties, the
Dillingham Corporation has exclusive rights in four Bahamian areas
totaling 8,235 square miles. In these areas there are about four billion
cubic yards—roughly 7.5 billion long tons—of aragonite. At rock-bottom
price the whole deposit is worth more than $15 billion. An experienced
dredging company like Dillingham should be able to suck up 10 million
tons a year, which will net the Bahamian government an annual royalty of
about $600,000.

On the basis of such big, round figures, the mining of aragonite
seems to be a bonanza operation. In reality it is still a doubtful
venture for both Dillingham and the Bahamas. For Dillingham the big
question is whether the aragonite can be hauled to market cheaply enough
to compete with other suppliers. For the Bahamas the question is more
provocative: What effect will the dredging have on tourism, the major
industry of the islands? Two years ago the Bahamian government made a
study of the tourist trade and found that out of a gross business of
$193 million, about $52 million in wages and profits ended up in
Bahamian hands. The bright beaches and clean waters, the deep reefs and
shallow coral gardens, the game fish of the fiats and the bigger game
fish of the open sea—these are the basic assets of tourism that are apt
to be diminished by a dredging operation.

Dredging is inherently a dirty business. Worthy servant though
it is, a hydraulic dredge simply does not fit into the natural scheme.
The spume created by the cutter of a dredge's maw and the cloudy water
from its discharge pipe are usually more than God's little marine
creatures can tolerate for long. The Bahamian government does not say
much about the aragonite operation, and the Dillingham Corporation says
almost nothing. In this day when all sorts of strident
anti-pollutionists are at the palace gates, reticence on the part of
anyone who is roiling the beautiful Bahamian waters is
understandable—understandable but also deplorable and, in the long run,
stupid. It is human nature to suspect big operators, particularly the
big, quiet ones who—true or not—seem to be making money hand over fist.
By their reticence the Dillingham people are inviting distrust and as a
consequence will probably be charged with crimes they have not
committed.

A mile or two west of the Dillingham Corporation's artificial
island, Ocean Cay, charter boats run the edge of the Gulf Stream in
quest of billfish and tuna. Often, on the ebb tide, cloudy water driven
by prevailing easterly winds moves from the Great Bahama Bank over the
deep. This cloudiness is sometimes caused by long swells born of distant
storms and sometimes by stiff local winds that kick up a fuss in the
shallows. When the Dillingham operation gets going full blast, it will
certainly add to the natural siltiness. In the future the cloudy water
that fishermen encounter may be the work of a Dillingham dredge or it
may be an act of God—or a combination of the two. It will not matter
which. Since fishermen are human, innately suspicious and easily
disgruntled, they will be inclined to blame all the dirty water on
Dillingham.

One of the Dillingham mining concessions completely surrounds
the Joulters Cays, a bonefishing area of proven worth. In the future,
when the water is cloudy and the bonefish do not respond to the lure as
they did of yore, the unlucky anglers will not take God to task; they
will curse Dillingham.

Northwest of Ocean Cay there is a deep and little-known reef
that stretches intermittently for eight miles along a submerged
terrace—a rich and spectacular range. There are narrow canyons and caves
in this drowned scarp, and a profusion of fish large and small. From
the way the living corals spread over the buttresses of ancient rock it
is obvious that the existence of the deep reef depends on a prevalence
of clean water from the Gulf Stream. In the future if the water is often
cloudy and the life of the reef seems to be wasting away, the scuba
divers probably will blame Dillingham.

What effect aragonite mining actually will have on any parcel of
the Great Bahama Bank is still a wild guess since no one has a
sufficient grasp of the problem. Aragonite is fairly heavy stuff,
weighing almost three times as much as water. When stirred up, the
largest granules sink quite rapidly, but in a hundred tons of the
deposit there are a couple of tons of very fine stuff that can stay in
suspension for a week. In that time a large cloud of such material may
travel 30 miles, riding the tide and the whims of the wind, casting
shadows over rich marine areas that seldom suffer under such a pall. In
scientific papers already published on the Great Bahama Bank there is
good information about the movement of water, but none detailed enough
to indicate just how a constant stream of cloudy water is apt to wander
from a given location.

Before any biologist could assess the effect of aragonite
mining, he would have to know a bit about the operation, specifically
how the dredges are to be used and the expected rate of production. The
Dillingham Corporation has declined to give out such information,
maintaining that it might be "a benefit to other suppliers of limestone
on the mainland." Since the corporation has exclusive rights to the
Bahamian drifts, and will be using mining techniques different from
those employed in quarries, it is hard to see how such basic information
could possibly benefit rival suppliers on land.

The Dillingham Corporation claims that the Bahamian government
has already had "ecological studies" made in the area of Ocean Cay and
is having "continuing studies every 90 days." Although this claim is a
slight overstatement, it is true that, at the request of the Bahamian
Ministry of Agriculture and Fisheries, last December Dr. Durbin Tabb of
Miami's Institute of Marine Science did make a two-day survey of the
area. Dr. Tabb was obliged to conduct his investigation on a budget of
$1,500 and without a complete idea of the dredging technique or any
knowledge of the expected rate or continuity of production. On the basis
of his hit-and-run survey, Dr. Tabb concluded that there was no solid
reason why the relatively sterile aragonite drifts should not be mined,
provided the operation was kept under surveillance. He was particularly
concerned with the effect the altered bottom contour might have on
turtle-grass beds in the shallows and what effect the silt from dredging
might have on tuna migration in the deep.

Confronted by concern among biospecialists and by rumbling in
the press, last month the Bahamian Government Information Services put
out their first news release on the aragonite operation. The release
emphasized Dr. Tabb's solid opinion that the aragonite areas are
undersea Saharas of little biological worth. It said nothing about what
might happen when the dust of these submerged Saharas is kicked up by a
dredge and drifts over richer areas downstream.

A large hydraulic dredge with a two-foot throat can easily pick
up 10,000 cubic yards of loose aragonite in a day. In the process it
also sucks up at least six times as much water—roughly 10 million
gallons. When that much silty slurry drains directly back into the sea,
it creates quite a cloud—virtually an endless stream since dredges
usually operate day and night in the interests of economy. Under their
contract with the Bahamas, the Dillingham Corporation has the right to
pile up 12 artificial islands. Logically, in the coming years the
corporation will situate these islands so that dredges with a practical
range of several miles can discharge aragonite and slurry directly onto
them. In such case the cloudiness will certainly be diminished. The
extent of it will depend largely on how much silt the head of the dredge
stirs up and how much remains in solution when the slurry drains, or is
pumped, off the islands.

When a storm of gale force sweeps the Bahamas it produces cloudy
water that may persist over vast areas for as long as a week. A hundred
dredges toiling around the clock could not possibly create a condition
comparable to what the Bahamas get when a hurricane gives them a good
dusting. But there is a difference. The storms of nature are a very
sporadic blight. They have occurred throughout many yesterdays and will
come again tomorrow. The life of the sea, often hanging in fine balance,
has accommodated to that inevitability. Human pollution is a brand-new
burden. The unnatural filth suddenly contributed by man may be only a
pennyweight of the total, but that is sometimes enough to tip the scale.

Drab though it is to the naked eye, a mat of turtle grass on the
sea floor is quite a vital place. On the slimy blades of grass there
are a host of minor organisms that feed on smaller organisms and are
themselves eaten by larger ones. Seven years ago Dr. Donald Moore of
Miami's Institute of Marine Science found, among other things, 28,000
univalve and bivalve mollusks in one square meter of turtle grass. Ten
years ago, using seines and push nets, Victor Springer and Andrew
McErlean of the Florida State Board of Conservation sampled a shoreline
flat of the Florida Keys one day each month for a year. Although the
sand and grass tract they searched was less than two football fields in
area—and the water did not exceed five feet in depth—Springer and
McErlean found 106 species of fish. Grunts, snappers, gobies, porgies,
blennies, wrasse, groupers, barracuda; yellowtail and tripletail;
batfish and lizard fish; goatfish and parrot fish; big-eyed jacks and
little queen triggers; pipefish and filefish and spadefish; bonefish and
surgeonfish; needlefish and thread herring—you name it, Springer and
McErlean found it. A good number of fish they netted in the shallows
were juveniles of species that subsequently take up residence on coral
reefs in deeper water.

Many fish that dwell in, on, or around living coral return to
the grasses behind the reef to forage. Some of these reef dwellers go to
the grass to feed by daylight, others hole up by day and feed at night.
As Dr. Gilbert Voss of the Institute of Marine Science puts it, "toward
evening, between the reef and the turtle grass, there can be a real
traffic jam." While serving at the University of Puerto Rico three years
ago, Dr. Jack Randall examined the stomachs of 5,526 reef fish of 212
species. Curiously, although soft coral polyps are easily ingested, and
should be nourishing, only 10 of the 212 species that Randall examined
had eaten any coral—none of them more than a trace. A preponderance of
the species Randall studied were directly or indirectly dependent on the
turtle-grass beds for nourishment. Sea urchins, which eat turtle grass,
would seem to be too painful a mouthful for almost any fish, yet
Randall found a considerable percentage of urchins in the stomachs of 34
reef species.

In the clear waters of the Bahamas today nursery and feeding
grounds of turtle grass commonly prosper 25 feet down and have been
found at 40 feet. By contrast, for want of light in the turbid waters of
Biscayne Bay around Miami; turtle grass is no longer found much deeper
than 10 feet. To sum it up, when a dredge forces a turtle-grass bed out
of business, the curtain also comes down on a hell of a big variety
show.

It is a common fallacy of man to believe that a profusion of
other forms of life is proof of their prosperity and permanence. Despite
all its variety and oddity, despite its apparent extravagance and
luxuriance, a coral reef is often a desperate place. As viewed through a
diver's mask, magnified to heroic proportion, the finest reefs of the
Bahamas seem to be durable, monumental works of long standing. In truth
the very best of Bahamian reefery is no more than a thin veneer—a very
recent culture of reef corals that has managed to take hold and spread
mostly in the past 5,000 years under conditions that have probably never
been ideal.

When silt particles settle upon them, the polyps of
reef-building coral must work to get rid of the intruders. When the
workload becomes excessive, the polyps are forced to close shop for a
while—and sometimes forever.

Today, largely because of the work of the late Dr. Thomas Goreau
of the University of the West Indies, scientists recognize that turbid
water has still another adverse effect on reef corals. In clear, shallow
water of 10 feet the coral Acropora palmata—one of the primary
reef builders—is usually massive, thick-limbed, on all counts prosperous
enough and strong enough to hold its own against the constant invasion
of borers and the pummeling of the sea. A mere 10 feet deeper, the same
species, if found at all, is much weaker in structure, and growth by
actual measurement is considerably slower. When cloudy water
persistently reduces the light, the coral is, in effect, thrust to a
depth where it cannot build and where it may not survive.

When Astronauts return to earth, the moon dust is vacuumed from
them and they are quarantined for two weeks. The moon dust is reputedly
sterile, but we take no chances. The Dillingham Corporation and the
Bahamian government are willing to gamble with the sterile dust of the
aragonite drifts. When there are so many specialists today who can
minimize the risk, why do they gamble? Primarily, it seems, because
Dillingham prefers to hoard the truth and the Bahamian government is too
skinflinty to pay for a proper investigation. In a day when we are all
getting a trifle sadder and wiser about the environment, this view is as
murky as the waters surrounding Ocean Cay.

Groups demand more aragonite royalties

Bahamas Public Services Union (BPSU) President John Pinder yesterday called on the government to increase the royalties it receives from aragonite mining.

Pinder estimated that the government could pocket as much as $300 million per month, or $4.2 billion a year, if it renegotiated its aragonite royalties to no less than $350 per metric ton.

The government currently receives $2 per metric ton of aragonite exported out of the country, Pinder claimed.

Pinder said the increased revenue could pay off the national debt and negate the need for new taxes, such as the proposed value-added tax (VAT).

“I’m deeply shocked and aggrieved to find that successive governments of The Bahamas, starting from the UBP, the FNM and the PLP, have all done us a disservice by signing a contract and giving away the natural resources of our country for pittance,” said Pinder at a press conference in Rawson Square.

Members of the Bahamas National Citizens Coalition, the Police Staff Association and the Prison Officers Association attended.

They support Pinder’s call for increased aragonite royalties.

Aragonite is a naturally occurring, valuable carbonate mineral.

Pinder said aragonite is sold at $900 a metric ton.

“We believe that certainly the government can do much better than that, as the country is strapped for cash at this time and a number of things are needed and the government does not have funds to do these things,” he said.

Currently, the only major aragonite mining operation exists on Ocean Cay.

That project is carried out by Sandy Cay Development Company Limited under a 25-year lease initiated in 2010.

Among the companies that Sandy Cay Development Company supplies is U.S. Aragonite Enterprises LLC, which produces a plastic product known as Oshenite.

Pinder said his union understands that the government’s contract with the company for aragonite export expires on June 3, 2014.

“We are asking the government in its new negotiations on the royalties on aragonite coming out of Ocean Cay, to not receive less than $350 a metric ton.”

Pinder added: “We believe if the government is able to accomplish this, we are talking about paying off our national debt in 18 months.

“We’re talking about moving from being borrowers to lenders. What China is to the world today is what The Bahamas could be to the Caribbean.”

He added that revenue from increased aragonite royalties could be used to pay every Bahamian at least $50,000 within 18 months of adjusting the terms.

“We are asking the government before it presents its budget to the House of Assembly this month to please insert what revenues we will receive from aragonite so that the country is able to move forward in a more positive way,” Pinder said.

When contacted for comment, Minister of the Environment Kenred Dorsett said the details surrounding aragonite mining, including increasing the royalties the government receives, are under consideration.

The Nassau Island Development Company plans to meet with residents of east Grand Bahama tonight to discuss an aragonite proposal.

The company said it has submitted a proposal to the government to develop a $50 million aragonite facility.

A country with no plan, pt. 3

I cannot, with any degree of honesty, call myself a supporter of Robert Mugabe, but there is one quote attributed to him from a recent interview with BBC World News which resonates within me. And though I find his style of leadership questionable, I cannot deny that I am in full agreement with his thinking when he declared to his people that “…never, never again shall we make the mistake of allowing our resources – natural resources – to be owned by foreigners. Never.”

I am of the opinion that foreign direct investment (FDI) should never include the giveaway or sale of natural resources, be it acres of land or miles of beaches and waterfront. A sovereign country should always be able to negotiate terms of investment from a position of strength, upholding its sovereignty, such that the very land it is presiding over remains in the ownership of the citizens, guarded on their behalf by their government.

The injection of capital in the form of FDI, in the way we have welcomed it, may serve well as a last resort to boost economic activity, but as a long-term growth model it is worrisome. We have come to think of FDI as the great deliverer, but this neglects to consider the necessity of direct domestic investment and moves the prospect of property ownership further beyond the reach of the common man. A modified approach to FDI where domestic investment is the lead part of FDI should be the norm, particularly in a small country.

This norm and modified approach to FDI should also limit the percentage of ownership of foreign investors in domestic investment partnerships to a capped amount of 49 percent with the remaining 51 percent held by the citizens of the host country as private shareholders, and not held in trust with a government where it does nothing to create new wealth and continuing prosperity for the people.

As is the case at present, a government could choose to have as much FDI as it likes with many capital injections and it will give the perception that the economy is robust, but the real story lies in the domestic sector and with domestic investment. If you want to know how well the economy is doing, ask first how large the domestic investment sector is.

How vibrant is it? How much is it growing? What is it comprised of? What percentage of small businesses in the domestic sector account for overall economic activity? What is the ratio of domestic investment opportunities to FDI opportunities? What percentage of the labor force is employed in the small business/domestic sector as opposed to being laborers in a byproduct of FDI?

And, finally, to get a better idea of long term growth potential, you should also ask how many businesses in the domestic sector really do innovate and are not merely international franchises, resellers or reproducers. You should then seek to bring partners who facilitate the development needs of the domestic sector, not the other way around.

Small business and real growth

The reason small business is the ‘lifeblood of the economy’ is because it relies on innovation, but a search through the local yellow pages and the news dailies is disheartening in this regard. A primarily copycat economy exists in our nation when there is great potential for invention. With the existing imitator blueprint, sustainable growth will be hard to come by. There cannot be sustainable growth until the people prepare themselves to have ownership of original ideas, instead of just employment in duplicates, and until they are creating and innovating as opposed to replicating.

Our country’s net exports in services yield a surplus. Our net exports in goods yield a deficit. We have more services than products to offer the world. Certainly services are an important part of an economy. But what about the other part?

We go to work every day, but what are we producing? A tourist has a great vacation. An offshore investor makes more money. But in this environment how does our daily labor make our lives better? Really, how productive are we in these industries? And how do we quench our thirst for expensive imports when we do little to innovate?

At the end of the day, we still lack infrastructure; we have very little along the lines of finished manufacturing and agriculture, and FDIs leave the same way they came. If these business ventures were more than FDIs, if they were joint ventures with all the consumers in the national economy, we might have more to show for them.

Some argue that we can’t be a producing economy in the traditional sense, that our services will always be greater than our goods, but we have many natural resources and we have them in abundance. If our people were trained throughout life to be innovative and not reliant we could have a stronger and burgeoning domestic business sector and a more resilient economy with more to trade than just ‘heads in beds’ and stock portfolios which consist of assets we can’t even purchase.

As it stands, we are too heavily reliant on people wanting to visit us and on them spending more money here, constantly trying to find ways for them to empty their pockets when our productivity could be speaking for itself in a number of other ways.

There are very many local businesses that provide necessary products and services. Of course we will always need groceries and healthcare and other such necessities, but we have to think beyond the necessary. How do we make the necessary better, more effective and more efficient? That is innovation.

If you sell something already, perhaps you can learn how to make your own version of it or make it better. Keep your business idea as simple as possible and in this manner make it more achievable. Let it grow organically and tend carefully to it as it grows; don’t sit and wait for handouts from visitors. Initiate. Innovate.

A laissez-faire society hinders progress

Inviting tourists to the country and then hoping they will buy something expensive or a lot of something not too expensive is like drawing straws for a prize. It sounds great in theory – a relatively easy win. But what happens when we all get bored with that game? What is our backup when tourists and investors don’t come our way any longer, or when they don’t spend any more, or when our people no longer want to be only servants in any industry?

We are a people who hasten to fall back on “God will provide”. Perhaps for us the spirit of innovation is not instinctive, and maybe that’s why we go nowhere faster. Our motivation to assert ourselves and produce great things like we’ve never done before is pre-disabled.

It’s all well and good to dress up every day and prance around preaching prosperity to others, saying a higher power will provide, but what are we doing to help that power along?

If you were the highest level executive, would you provide to a well-dressed, able-bodied beggar who plainly does not help himself? Probably not, because that would be productive for neither one of you.

Gross Domestic Product (GDP) is a measure of what we produce, how industrious we are, but the deceitful thing about GDP is that it includes output by foreign firms who repatriate their earnings to their own or other countries. So, when we calculate GDP per capita, what are we truly measuring?

Because of foreign investment and foreign banking, we’ve had the highest GDP per capita in the region for decades and, because of tourism, we’ve had adequate foreign currency reserves to support our fixed dollar value, yet our people are still poor. That GDP per capita and those foreign currency reserves suggest that we are either over-producing, which is clear we are not, or that this kind of great wealth is spread amongst everyone, which is clear it is not, or that it is held by a small few, which is most likely. And the few holding this wealth will use it to modernize their lifestyles and possessions, because who knows when they’ll get to hold it again. Consequently, is economic growth through foreign direct investment, foreign banking and tourism really just an illusion in an otherwise non-producing society?

• Nicole Burrows is an academically trained economist and a self-trained writer. She writes primarily on the economy and society, and her interests include economic growth and development and contemporary women’s issues: nicole.burrows@outlook.com.